Mixed news from Blystad FPSO venture

Nortechs FPSO PTE Ltd., part of the Blystad Group, specializes in developing readily redeployable and flexible floating production storage and offloading units.

It's listed on the Norwegian OTC market and today issued two OTC announcements.

First the good news.

Nortechs has entered into an agreement with Peak Petroleum Industries Nigeria Ltd. ("Peak") for the FPSO East Fortune to provide production, storage and offloading services on the Bilabri Field, located in Block OML 122, offshore Nigeria.

Following a short yard stay in Singapore, required to carry out the modifications and upgrades necessary for operating in Nigeria, the FPSO East Fortune will set sail from Singapore in time for production from the Bilabri Field to commence by the end of 2008.

The primary term of the contract is three years, with Peak having the option of extending the contract for up to a maximum of 10 years. The total nominal value of the contract, excluding options and production incentives, is about $110 million.

Now for the not-quite-so-good stuff.

In addition to East Fortune, which was refurbished at Drydocks World Singapore, Nortechs' other main material assets were two suezmax hull sections it procured in 2007 to develop into FSO and FPSO projects.

Today it announced they have been sold for scrap.

The decision to sell the hull sections was made because increasing construction costs and lead times made the projects less competitive in comparison to standard conversion projects.

Still, the units were acquired for $13 million and have now been sold for about $14.5 million net.

Nortechs will pursue its strategy of developing generic readily deployable FPSO's and is in discussion to obtain a second vessel for conversion purposes.